Why NuScale Power shares are up 12.3% today

Actions of NuScale Power (SMR 9.73%) rose as much as 12.3% in trading on Tuesday as the market continues to push nuclear power stocks higher. Shares gave back some of those gains late in the day, but were still up 7.4% at 3:30 pm ET.

The nuclear boom continues

In recent weeks, technology and energy companies have come together to offer an optimistic view of the future of nuclear power. Microsoft and Constellation Energy announced the restart of a reactor at Three Mile Island, of Oracle The CEO said the company will build three small reactors at a data center, and Constellation’s CEO said artificial intelligence (AI) will not happen without nuclear power.

There is clearly momentum behind the industry that is driving share prices higher right now. But will the industry deliver profits to justify rising share prices?

Now it’s time to deliver

The challenge for investors buying nuclear stocks today is that the technology’s potential is years and possibly decades away. Three Mile Island won’t open until at least 2028, and it’s unclear when small modular reactors will be available.

If you look at NuScale’s revenue and free cash flow, there aren’t a lot of business operations to support the growing value.

SMR Revenue (TTM) data by YCharts

I think nuclear power could provide value in the future, but its economic value to investors has been debatable for more than a decade. And until we see some more certainty, I’m going to hold off on this move in nuclear stocks.